Eyeing IPO, Alibaba Gets Go-Ahead To Restructure Ant Financial

Alibaba Wins Regulatory Approval To Restructure Ant Financial

Chinese regulators have given the green light to Alibaba to restructure Ant Financial, which will open a path for an initial public offering (IPO) for the Chinese payments company. 

The Financial Times is reporting that the move comes only weeks after the retirement of Alibaba Founder Jack Ma. The proposed restructuring will happen with Alibaba exchanging 37.5 percent of pre-tax Ant Financial profit for a 33 percent stake in equity. The company has been trying to make it happen since as early as February of last year.

Ant Financial is worth around $150 billion, making it one of the most valuable private sector FinTech companies in the world. It was started out of Alipay, which in turn was developed by Alibaba. Ant Financial also owns the world’s biggest money market fund, Yu’e Bao, and a credit-rating system called Sesame Credit.

Yahoo and SoftBank were two of Alipay’s biggest initial investors, and there was a dispute when Ma transferred it into a separate entity from Alibaba and under his control.

Ma’s argument was that Alipay couldn’t do business in China if it had foreign owners. Eventually, a profit-sharing agreement was worked out that had Alipay compensate Alibaba with royalties. Despite many funding rounds for Alipay, Ma has retained control.

Now that the restructuring deal is complete, the ownership of Ant Financial is clarified. Ant’s IPO process is expected to take some time, due to the size of the company. 

Alibaba Chief Financial Officer Maggie Wu said that the move to an IPO would mean better collaboration between companies and “the whole Alibaba economy.”

Ant Financial produced a pre-tax profit in the neighborhood of around $200 million, according to Alibaba’s yearly report. 

Eric Jing, chairman and chief executive of Ant Financial, said Alipay serves 1.2 billion users around the world, which is an increase of one fifth since the end of December last year. Around 300 million are not in China. 


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.